Delivering a Best-in-Class Cash Application Process

By Prakash Hariharan

As AR pros focused on enhancing cash and working capital management are well aware, Cash Application is a critical sub-process within the end-to-end Order to Cash process. An under-performing Cash Application function impacts important outcomes such as cash flow and sales in the medium term. Payments not applied on time lead to poor account reconciliation, resulting in customers delaying payments, which in turn impacts the entire organization’s cash flow performance.

While many controllers and AR managers have overseen implementation of new technology solutions to help improve cash application performance, success with these automation tools has been less than expected. Among the key reasons for this sub-par performance are:

  • Non-standardized processes,
  • Low-end customer adoption, and
  • Lack of robust tracking mechanisms for operational metrics.

Clearly, relying on technology alone will not help improve performance beyond a certain level. End-to-end process views, operational best practices, and analytics-based improvements are all elements that must be tightly integrated with technology advancements to achieve significant improvement in overall performance.

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